SHV ETF

Discussion of the Cash portion of the Permanent Portfolio

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Jeffreyalan
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SHV ETF

Post by Jeffreyalan » Thu Aug 03, 2017 8:03 pm

Does anyone use SHV (ishares short term treasury) ETF for their cash component? I always wonder why its return is so low. Right now tbills from 3 months to a year will get you over 1% on Treasury Direct. But yet SHV has only returned .33% so far this year. Even taking into account the .15% expense ratio that seems low. I like the ease of that vs Treasury Direct but I also want to maximize my returns!
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sophie
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Re: SHV ETF

Post by sophie » Fri Aug 04, 2017 7:45 am

Not sure where you got your info from? Current dividend yield for SHV is 0.73%. That plus the 0.15% ER gets you pretty close to the yield of short term T bills.

A treasury-only money market with checking privileges is probably the ideal for "shallow" cash, but this hasn't been available for a long time. I just looked up a couple. Fidelity has one with a mind-blowing 0.42% ER and low yield. Vanguard has one (VUSXX) with a 0.09% ER and 0.9% yield which is fabulous, but it has a $50K minimum to open. Perhaps these are slowly coming back.

In the meantime...a combination of online savings accounts, autorolled T bills or a hand-built short term treasury ladder, and savings bonds for "deep cash" is what most of us have been using. SHV is perfectly valid but it doesn't seem to be high on the radar.
Jeffreyalan
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Re: SHV ETF

Post by Jeffreyalan » Fri Aug 04, 2017 7:53 am

https://www.ishares.com/us/products/239 ... y-bond-etf

The ishares website reports .34% as the YTD gain, as does morningstar. Powershares has a new ETF CLTL that is similar to SHV but at only half the expense ratio. I have been leaning towards the ETFs for the simplicity. I understand their risks, i just didnt want to take a huge performance hit.
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jhogue
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Re: SHV ETF

Post by jhogue » Fri Aug 04, 2017 8:28 am

Jeffreyalan wrote:https://www.ishares.com/us/products/239 ... y-bond-etf

The ishares website reports .34% as the YTD gain, as does morningstar. Powershares has a new ETF CLTL that is similar to SHV but at only half the expense ratio. I have been leaning towards the ETFs for the simplicity. I understand their risks, i just didnt want to take a huge performance hit.
Jeffreyalan,

I used ETFs for Short Term Treasuries (SHV and SHY) and Long Term Treasuries (TLT) when I adopted the Permanent Portfolio about 4 years ago. I thought ETFs would be easy too—and they are simple.

Since then, however, I have shifted over to direct purchases of STTs and LTTs for my tax deferred accounts through Fidelity. Not only do you trade for free, you get an expense ratio of 0%, and you also lose the tiny bit of counterparty risk that goes with trading ETFs. (I think Vanguard has the same deal too.)

Gumby wrote up a Treasury Bond Buying Tutorial under Bonds on the forum. I found reading it to be a great way to do a “dry run” before doing an actual purchase of LLTs or STTs. See:
https://gyroscopicinvesting.com/forum/v ... f=3&t=1670

Best of Luck,
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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